You're already familiar with ETFs and feel it's time to dive into active investing. How do you get started?
If you’ve nailed the basics and want to take your investing game to the next level, the first step is quality education. Active investing can mean different things, from short-term trading to picking specific stocks. Both strategies can potentially be more profitable—but also riskier—than passive investing through ETFs or exchange-traded funds that track selected assets.
“They are also much more demanding in terms of time, knowledge, and discipline,” warns financial market analyst at XTB, Matej Bajzík.
The first option is active trading. Here, investors don’t invest for the long term but try to profit from short-term price movements. This requires constant market monitoring, technical analysis, risk management, and the ability to handle psychological pressure. The upside is potentially quicker returns, but the price is high: risk of losses, stress, and the need for a systematic approach.
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The second option is so-called stock picking, selecting specific stocks for your portfolio. This means diving deeper. Investors analyze companies, their business models, numbers, competition, and future outlook.
They need to understand fundamental analysis, read financial statements, and develop their own investment ideas. This way, investors might achieve above-average returns but also underestimate risks they might not normally consider. In investing, there’s no free lunch.
In both cases, continuous education, testing your strategy, and the ability to manage emotions are crucial. Active investing isn’t for everyone, but for those fully committed, it can be a path to above-average results.
